Consumer eViews

Volume 3, Number 19, May 8, 2006

Floridians scored a victory this session with nearly $1 billion set aside for insurance relief, including $715 million to reduce the burden of insurance assessments and $250 million to hurricane-proof homes which will help lower insurance premiums.

Since 2004, I have urged legislators to earmark surplus revenue collected during hurricane recovery to help homeowners deal with insurance assessments, hurricane repairs and hurricane preparation, and the Legislature has responded. 

We have collected millions in sales taxes during hurricane recovery and the fair thing to do was to give it back to Florida’s families to deal with insurance costs.  

Senate Bill 1980 directs $715 million be used to offset insurance assessments levied by Citizens Property Insurance Corporation for a deficit caused by losses during the 2005 hurricane season.  Under Florida law, the company’s deficit must be paid through assessments on all Florida homeowners' insurance policies.

The legislature also set aside $250 million to help Floridians strengthen their homes to withstand hurricane winds, bringing the total relief for insurance costs to nearly $1 billion.  The $250 million would be used to do free home inspections for homeowners and provide matching grants up to $10,000 for home improvements.

Even with this important victory, we must continue our quest for federal solutions to help strengthen our property insurance market and improve availability, including the creation of a national catastrophe fund as well as catastrophe savings accounts.

Federal and state reforms combined with insurance relief will help ensure a long-term victory for Florida’s homeowners.

-- Tom Gallagher


Tom Gallagher, Florida’s chief financial officer, said that American Mercury and Mercury Insurance companies have agreed to refund more than $2 million to their policyholders in Florida. According to the state’s Office of Insurance Regulation, its examination of the two companies was initiated based on consumer complaints referred by the Department of Financial Services and found the companies improperly cancelled coverage and denied claims.

“Obtaining restitution for consumers should be our top priority when action is taken against an insurance company for improper practices,” said Gallagher, who oversees the Department of Financial Services. “We will continue to shed the light on companies that engage in an abusive pattern of denying claims or dropping policyholders.”

In addition to refunds, the Office of Insurance Regulation ordered the two companies to pay $1 million in fines and investigative costs. Its examination uncovered numerous violations, including canceling coverage when a claim is filed and improperly denying or avoiding payment on claims.

Gallagher said Floridians who need help with their insurance companies or financial entities should call the department’s helpline at 1-800-342-2762. More information is also available at


Legislation enhances fraud penalties

Tom Gallagher, Florida’s chief financial officer, praised legislators for tightening the grip on fraud artists who steal from Florida’s hard-working families by staging or fabricating auto crashes and making fraudulent auto insurance claims.

“I applaud Sen. J.D. Alexander and Rep. David Rivera for promoting legislation to further cut off fraud artists who seek to profit from scams.” said Gallagher, who oversees the Department of Financial Services which includes the Division of Insurance Fraud (DIF). “Tougher laws strengthen our ability to put scam artists behind bars and help us put the brakes on this costly crime.”

Florida law requires drivers to carry a minimum of $10,000 in Personal Injury Protection (or PIP) coverage and $10,000 in property-damage liability coverage. Many auto insurance fraud cases involve unscrupulous lawyers, doctors and clinic owners who illegally bill for services covered by PIP, which provides coverage for medical bills from an auto accident, regardless of who is at fault.

Auto insurance fraud has been estimated to cost the average Florida family as much as $250 a year, but tough legislation passed in 2001 and 2003 in tandem with increased arrests and prosecutions have led to lower premiums in recent years.

"Fraud has driven up insurance rates for far too long. This legislation sends the message that fraud will no longer be tolerated," said Senator Alexander. "Those who participate in auto insurance fraud will pay for their crimes."

Representative Rivera said the legislation also will help fight insurance fraud by providing for a forfeiture fund to help finance ongoing investigations into PIP fraud.

“The work being done by the Division of Insurance Fraud and law enforcement agencies around the state to combat insurance fraud is commendable,” Rep. Rivera said.  “As a result of aggressive investigations and prosecutions, auto insurance premiums are decreasing and that’s good news for Florida’s families.”

Senate Bill 1596, sponsored by Alexander, and House Bill 561, sponsored by Rivera, enhance penalties for the newest twists on auto insurance fraud – “phantom” and “paper” auto accidents that never actually occur – making either a second-degree felony punishable by a two-year minimum mandatory prison sentence. This corresponds with a 2003 law that established a two-year minimum sentence for anyone organizing or participating in an actual staged auto crash.

The legislation will also:

· Make it a third-degree felony for any service provider, such as a clinic or body shop, to waive insurance deductibles as a general business practice. Waiving deductibles makes it easier for individuals to profit from insurance fraud schemes.

· Require medical clinics to post the state’s Fraud Fighters reward program hotline and reward program information.

The legislation also provides for revocation of the driver’s license of anyone convicted of auto insurance fraud.

As another important new weapon in the fight against fraud, the legislation revises the patient-brokering statute clarifying that kickbacks for patient referrals are illegal whether the patient is being referred to or from a medical clinic, and that patients themselves may be punished for soliciting kickbacks for their cooperation in fraudulent billing schemes against the insurer. Further, the definitions of “health-care provider” and “health-care facility” are clarified so that all providers and medical clinics licensed in Florida fall under the patient-brokering statute.

Gallagher also successfully advocated for hiring at least three more dedicated prosecutors to be located throughout the state, joining two in Miami-Dade County. The first dedicated prosecutor, who served alone for nearly two years, is credited with more than a 20-percent increase in PIP fraud convictions and an 85-percent increase in jail time.

Gallagher has overseen DIF for the past five years, during which time the department has made more than 3,200 insurance fraud arrests including more than 1,000 PIP fraud arrests. The division has consistently led the nation’s insurance fraud bureaus in arrests and convictions.

Legislation enhances protections for children and emergency responders

State Fire Marshal Tom Gallagher said Florida’s children and emergency responders and, ultimately, its communities will be better protected because the Legislature passed a bill enhancing penalties for methamphetamine manufacturers.

“Methamphetamine devastates lives, but not just the lives of those who use the drug,” Gallagher said. “Children are being neglected, first responders are being exposed to toxic fumes and explosions at meth labs, and communities are dealing with the costs of cleanup and rehabilitation. This legislation will make a significant difference in protecting our communities from this evil drug.”

House Bill 1325, sponsored by Rep. Faye Culp, was unanimously approved by the Senate today and heads to the governor. Sen. Carey Baker was the sponsor in the Senate.

The legislation:

  • Authorizes the Department of Children and Families to begin dependency proceedings for the immediate removal of children found at meth labs.

  • Allows the courts to hold meth producers without bail while awaiting trial. This provision was included at the request of law enforcement because meth producers, once released on bail, often begin producing the drug again.

  • Extends criminal penalties to include firefighters and other emergency response personnel injured or killed while responding to meth labs (third-degree felony if injured; second-degree felony if killed or severely injured).

  • Prevents first responders from having life or health insurance canceled because they have tested positive for meth as a result of performing their jobs.

“The number of meth labs found in Florida has increased by 1,100 percent in five years, and that means more children, first responders and communities are at risk,” Sen. Baker said. “We must do all we can to fight back against this insidious drug.”

Culp said the legislation builds on successful strategies already put in place by Gov. Jeb Bush and the Governor’s Office of Drug Control. “Strategies such as putting cold medicines containing ephedrine behind the counter were a significant first step, but for those who still have not gotten the message that we don’t want meth in our state, they will know we mean business when they are left to sit behind bars.”

The legislation that passed today contains proposals Gallagher began advocating last June in response to the increase in meth lab seizures and fires in Florida.

The State Fire Marshal’s Office has responded to more than 50 meth lab fires and explosions in the last two years. And, in conjunction with the Multi-Jurisdictional Counter Drug Task Force, the State Fire Marshal’s Office has helped educate and prepare hundreds of Florida emergency responders to respond to the dangers these labs pose. Statistics indicate that more than 1,000 responders in 16 states, including Florida, have been injured responding to meth labs in the past five years, and nearly half of all children found in meth labs test positive for having the drug in their blood.


As part of Arson Awareness Week May 7-12, the State Fire Marshal’s Office will hold open houses at its regional offices and distribute information to the public about how to spot key indicators of meth activity.

  • Strong chemical odors such as ether, ammonia (smell similar to cat urine) and acetone (smells similar to fingernail polish remover)

  • Evidence of chemical waste or dumping Unusually active human traffic and activity in and out of property or home at odd times of day and night including frequent visitors

  • The frequent burning of “trash” on a property  

  • Curtains always drawn or windows blackened or covered with aluminum foil
  • Excessive amounts of cold medicines containing ephedrine or pseudoephedrine
  • Propane tanks with burn marks or altered valves
  • Charcoal starting fluid containers opened from the bottom
  • Heating sources such as hotplates, torches or camp stoves

This past weekend in Tallahassee, alert residents complained of a strong odor that made their eyes burn. Their call to law enforcement led to the arrests of seven people suspected of operating a meth lab.

“Meth labs have been found in rural, city and suburban areas, in houses, apartments, motel rooms, vehicles, back rooms of commercial businesses and elsewhere,” Gallagher said. “Everyone has a role to play in fighting this epidemic, and the Legislature’s vote today shines a light at the end of this tunnel.”

The chemicals used to create meth are highly toxic and flammable, and many labs are also booby-trapped. As a result, more than 1,000 first responders have been injured in meth labs found in 16 states, including Florida, since 2001.  Nearly half of all children rescued from homes or living areas used as meth labs test positive for meth and need urgent medical care.

The State Fire Marshal’s Office has provided intensive meth lab training to nearly 700 emergency responders, and this summer the State Fire Marshal’s Office and FDLE will hold courses to certify 50 additional officers who can respond to and dismantle meth labs.  

The Bureau of Fire and Arson Investigations is the law enforcement branch of the Division of State Fire Marshal that assists other state and local fire and law enforcement agencies in the investigation of fires of suspicious origin.  Anyone with information about any incident of fire is asked to call 1-877-662-7766 (1-877-NOARSON).

Gallagher is distributing a brochure urging the public to get involved and report meth lab activity. 

The brochure is available at


The Florida Legislature today passed HB 1567 which restricts the government taking of private property.  Following the bill’s passage Chief Financial Officer Tom Gallagher released the following statement:

“Last year’s decision allowing private property to be taken by government to fatten its tax base or for economic development was an outrage.  This bill provides a common sense check on the power of government and is great news for the property owners of our state.

“Within one day of the Kelo decision Speaker Bense responded and formed the Select Committee to Protect Private Property Rights.  I congratulate him and I thank Rep. Rubio for championing this legislation to increase the power of Florida property owners and limit the power of government.”


Tom Gallagher, Florida’s chief financial officer, applauded state lawmakers in both the House and Senate for passing legislation he proposed to boost financial literacy efforts in Florida. The legislation creates a Financial Literacy Council to serve as a central resource for consumers and small businesses on financial issues. Gallagher said he proposed the measure in response to polls showing too many Floridians are in precarious financial condition and are waiting too long to plan for their future.
“Data shows that one-third of Floridians have more debt than savings and are not saving enough to retire,” said Gallagher. “The Financial Literacy Council will serve as central resource and clearinghouse for families and small businesses to obtain the information and resources they need to make informed financial decisions.”

The new law creates a ten-member Financial Literacy Council headed by the Chief Financial Officer which would study the problems that affect consumers, particularly small businesses, young people, and seniors. It would be charged with creating a comprehensive state resource to provide financial planning assistance to Floridians. The resource will include user-friendly information on savings, loans, investment products, managing debt, and planning for college expenses and retirement.

The committee will also conduct outreach to assure consumers are made aware of the financial tools it develops through both web-based media, written educational materials and by holding public meetings around the state.

The bill was sponsored by Sen. Jeff Atwater and Rep. Thad Altman. Sen. Atwater said, “This resource will help our seniors navigate the often confusing choices they face in funding their retirement and more importantly will steer them away from poor investments that rob them of their savings.”

“Floridians need a resource that can provide easy-to-understand, common sense financial information from a source that isn’t looking to sell them something” said Rep. Altman. “That is what this legislation aims to create for our state’s consumers.”

The Financial Literacy Council would consist of nine members appointed by the CFO. The committee members would be required to represent the state’s cultural, ethnic and geographic makeup and will be drawn from various areas of the financial industry, the senior population and the public.

Consumer Services HelpLine (800) 342-2762